Groups urge Congress to lower cap on contractor pay

By Kellie Lunney

November 13, 2012

Federal employee unions and other groups on Tuesday called on lawmakers to lower the current compensation cap on non-Defense Department contractors to $400,000.

The letter to the leadership of the House and Senate Financial Services committees urged lawmakers to change the maximum allowable limit on reimbursable contractor pay from $763,029 to $400,000. The Senate’s fiscal 2013 financial services appropriations bill contains a provision lowering the cap to the president’s current annual salary, which is $400,000.

“Due to concerns about both fiscal responsibility and fairness, we believe it is important to reduce the compensation priced and/or reimbursed under U.S. government prime and subcontracts to federal contractor employees,” the letter stated. The coalition that sent the letter included officials from the American Federation of Government Employees, National Treasury Employees Union, Economic Policy Institute, Project on Government Oversight and OMB Watch.

The Office of Management and Budget in April announced the new statutory cap of $763,029 on contractor pay, a 10 percent hike over the previous limit of $693,951 for the top five employees. The new cap was based on a formula set in 1997.

“Private firms are of course free to pay their employees whatever they deem that they are worth, but the pricing and/or reimbursement provisions of government contracts should not allow such exorbitant rates to be paid by the American people,” the Nov. 13 letter said.